FAIR VALUE MEASUREMENTS

12 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

6. FAIR VALUE MEASUREMENTS

        Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

        The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

•         Equity put option—Provalliance.    The $0.6 million Provalliance Equity Put was classified as Level 3 as the fair value was determined based on unobservable inputs that could not be corroborated by observable market data. On September 27, 2012 the Company sold its interest in Provalliance and the Provalliance Equity Put automatically terminated upon closing of the sale.

          Financial Instruments.     In addition to the financial instruments listed above, the Company's financial instruments also include cash, cash equivalents, receivables, accounts payable and debt. The fair value of cash and cash equivalents, receivables, accounts payable, and debt approximated the carrying values as of June 30, 2013.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        We measure certain assets, including the Company's equity method investments, tangible fixed assets and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of our investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

        The following tables present the fair values of our assets measured at fair value on a nonrecurring basis:

	Fiscal Year 2013		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Investment in affiliates—EEG(1)	$	41,997	$	—	$	—	$	41,997	$	(17,899	)
Total	$	41,997	$	—	$	—	$	41,997	$	(17,899	)

(1)

The Company's investment in EEG with a carrying value of $59.9 million was written down to its implied fair value of $42.0 million, resulting in an impairment charge of $17.9 million. See Note 5 to the Consolidated Financial Statements for further information.

	Fiscal Year 2012		Level 1		Level 2		Level 3		Total Losses
	(Dollars in thousands)
Assets
Goodwill—Regis(1)	$	35,083	$	—	$	—	$	35,083	$	(67,684	)
Investment in affiliates—EEG(2)		59,683		—		—		59,683		(19,426	)
Investment in affiliates—Provalliance(3)		101,304		—		—		101,304		(37,383	)
Total	$	196,070	$	—	$	—	$	196,070	$	(124,493	)

(1)

Goodwill of the Regis salon concept with a carrying value of $102.8 million was written down to its implied fair value, resulting in an impairment charge of $67.7 million. See Note 4 to the Consolidated Financial Statements for further information.

(2)

The Company's investment in EEG with a carrying value of $79.1 million was written down to its implied fair value of $59.7 million, resulting in an impairment charge of $19.4 million. See Note 5 to the Consolidated Financial Statements for further information.

(3)

The Company's investment in Provalliance was written down to its implied fair value, resulting in an impairment charge of $37.4 million. See Note 5 to the Consolidated Financial Statements for further information.